American and JetBlue announced yesterday that travelers flying on one airline can now earn miles in the other airline’s loyalty program. This is the expected, logical next step in the continuing rollout of their Northeast Alliance, but there is something in here that I think may be overlooked. The way that the mileage earning is being deployed means that these airlines will now share a lot of sensitive data with each other.
As announced, here’s how this will work. American AAdvantage members will earn 5x the fare paid when they fly on JetBlue and enter their AAdvantage numbers. Elite members earn bonus miles up to a total of 11x the fare paid for Executive Platinum at the top end. Meanwhile, JetBlue TrueBlue members will earn 1x the fare paid for Basic Economy and 3x for everything else. That doubles if travelers book direct, and there are bonuses for Mosaic members, those with the credit card, etc.
In other words, travelers will earn at the exact same rate in each program regardless of which airline they’re flying. That is an attractive proposition for the traveler.
Unlike other parts of the Northeast Alliance between the two airlines, mileage-earning is valid for all flights systemwide with just one carve-out — JetBlue’s Transatlantic flights cannot earn AAdvantage miles, as agreed upon with the Department of Transportation (DOT) previously. But hey, if you live in LA and buy a JetBlue ticket to San Francisco, you can earn American miles. And if you live in Flagstaff and buy an American ticket to Dallas/Fort Worth, you can earn TrueBlue points.
By now you’re likely wondering… what does this have to do with sharing sensitive data? Well, in order to award those points, the airlines need to know what travelers on the other airlines paid for their tickets. This is a novel concept.
Most partner mileage earning propositions still award points based on distance flown, because that’s easy to decipher. For example, American awards AAdvantage miles for travelers on Alaska like this:
And JetBlue awards TrueBlue points for travelers on Hawaiian this way:
The norm is to approximate fare contribution by awarding more miles to those in higher booking classes (RBDs). But American and JetBlue awarding each other’s passengers based directly on fare? That is something new, and that’s information that can be particularly valuable.
To use a blatant example, American flies from JFK to Paris today. Many New Yorkers may now prefer to earn TrueBlue points on those flights since they need to send the kids to visit the grandparents down in Sarasota, and everyone knows JetBlue is the way to go for that. If they do choose to earn TrueBlue points on that flight, then American will have to report the fare paid for each ticket to JetBlue. If I’m on JetBlue’s network planning team, I’m salivating at the prospect of getting that information as I evaluate where to send my planes next in Europe.
Sure, JetBlue and American have the ability to coordinate schedules in New York and Boston thanks to the DOT-approved agreement, but they don’t have the right to coordinate fares. Even if they did, remember that the alliance is only for those two cities, but the mileage earning is systemwide (or, almost so for JetBlue).
Let’s look at another example. American and JetBlue compete against each other in the Austin to LA market. Now they’ll have to share the fare data with each other if the traveler opts to earn on the other airline, and that could help inform future decisions in marketing, pricing, and network planning. This becomes even more interesting down in South Florida where both airlines have large customer bases and are supposed to be competing ferociously. The airlines could glean really helpful information by knowing more about the other’s passengers.
I spoke with American about this, and they really downplayed the significance of the data-sharing. Spokesperson Andrea Koos made sure I knew that they would only share the fare data if the passenger opted to earn miles on the other airline. It’s not just a blanket data dump. She also explained that the data will not be shared until after travel has completed, so this isn’t advance fare information which would be more concerning. Lastly, she said this:
This is a fully automated process, and the data is used only for purposes of administering the AAdvantage program.
If that’s a policy, it sounds like a policy that could be changed. I don’t imagine there’s anything explicitly illegal about sharing past fare data with the other airline. After all, there are sources out there where you can get some of this data, though none of it personally-identifiable like this will be. If I’m in network planning, marketing, or revenue management, I would love to have that data in my hands.
Of course, even if it doesn’t break laws, it may raise the interest of the Department of Justice (DOJ) as they continue to review the alliance. This is certainly an alliance in uncharted territory.
[Updated to reflect the incorrect assertion that there was any sort of antitrust immunity between American and JetBlue. They do not have antitrust immunity in any way, but DOT did bless them working together on schedules.]
